The headline is here from earlier;

Moody's on the UK, says large, unfunded tax cuts a credit negative (who'dathunkit, eh?)

Further from the Moody's piece ... dour reading this:

  • Large unfunded tax cuts will lead to structurally higher deficits amid rising borrowing costs, a weaker growth outlook and acute public spending pressure stemming from the pandemic and a decade of austerity.
  • A sustained confidence shock arising from market concerns over the credibility of the government's fiscal strategy that resulted in structurally higher funding costs could more permanently weaken the UK's debt affordability.
  • The government's energy price cap will directly reduce inflationary pressures in the near term. However, we expect real disposable incomes to decline this year because inflation, which we forecast will peak close to 11% in the coming months, will remain elevated and above the central bank's target of 2% until 2025.
  • Large unfunded fiscal stimulus - and higher imported inflation if sterling's depreciation persists - will prompt more aggressive monetary policy tightening, weighing on growth in the medium term.

Moody's accompany their piece with forecast revisions:

  • revised our real GDP growth forecast to 3.3% for 2022 from 3.0%
  • lowered our forecast for 2023 to 0.3% from 0.9% previously
  • we do not expect growth to return to its potential until 2026

GBP response to the budget announcement last week (final two candles, and I stuck an RSI below for the LOLs ... been 'oversold' for a loooooong time):

weekly gbp 28 September 2022